The Body Shop International

In: Business and Management

Submitted By mdavidson52
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25 Finance Student 5010 South Robertson St. New Orleans, Louisiana 70115 (908)-752-2924 January 20, 2015 Anita Roddick, Founder: The Body shop International PLC 2001 Re: Case C: Chapter 8: The Body Shop International: An Introduction to Financial Modeling, Years 1 – 3 Observed Value of The Body Shop International as of February 28, 2004 = 2,000,000 GBP Dear Mrs. Roddick: As you requested, I have forecasted pro-forma statements and ratio analysis factors of The Body Shop International for Years 2001 through 2004, using the information presented in Bruner and the forecast assumptions on the Case Studies in Finance pages 120-126. I used these forecasted pro-forma statements as an Initial Scenario to analyze the interactive quality of the forecast assumptions made, and I adjusted the forecasted assumptions to I found the Borrowing amount for The Body Shop International as of 2001 (the beginning of Year 1) to be = $5,904,000. 1) & 2) I derived my forecast by taking a random growth rate percentage and the COGS/Sales ratio that the book had provided. As I plugged in higher growth rates the company debt began to grow larger. However the Retained earnings began to grow as well. The COGS/Sales ratio showed to have a similar affect but with a far greater increase in company debt. Whether there is an Increase in growth rate or and increase in the ratio of COGS/Sales, they both present an extreme increase in New Debt. If the COGS/Sales ratio were to rise to about 45% during this period, the company would need to start borrowing and would need to borrow roughly 2.5 million to achieve the sales figures and earnings that have been forecasted here. 3) The basic assumptions on pages 120-126 caused the forecast of an increase in the retained earnings balance at the end of 2004, which I believe is correct; a increase in new…...

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